Volkswagen Phaeton, CC, Passat Replacement for North America

VW is lining up products better tailored to fit the U.S. market, while banking on a growing acceptance of diesel engines.

With a renewed focus on vehicles tailored to the North American market, Volkswagen has a slew of products in the pipeline.

In the coming years, look for a return of the top-of-the-line luxury Phaeton, a new four-door pseudo-coupe slotted just below it, and a replacement for the Passat that is substantially larger than today's model, as well as a minivan and an emphasis on diesels, according to Stefan Jacoby, president and CEO of Volkswagen of America, in an interview with Car and Driver.

Starting from the top of the line, VW is investigating the return of the Phaeton to the North American market, says Jacoby, who recently moved from Germany to oversee U.S. operations.

"I think it fits perfectly in the market. We will bring it back," he says, adding the automaker is sorting out timing and specifics.

Bigger, More Powerful Phaeton Launched in the U.S.

The sedan, which marked VW's first foray into the high-end luxury segment, was first introduced in Europe with a short wheelbase and V-6 in 2002. American officials argued for a bigger, more powerful version and convinced the parent company to engineer a stretched Phaeton with a choice of a 335-hp, 4.2-liter V-8 or 420-hp, 6.0-liter W-12 engine for North American debut a year later.

The automaker invested $212 million in d ie Gläserne Manufaktur—the Transparent Factory—in Dresden, Germany, that essentially is a glorified trim line. It finishes 30 or 40 painted car bodies a day that arrive by train, and it serves as a distribution center. Excess capacity now is being used for final assembly of the Bentley Continental Flying Spur (Silver Spur in Europe) to help the plant in Crewe, England, meet demand.

The Phaeton, which was offered as a four- or five-seater in the U.S., sold a fraction of its forecast, with consumers seemingly reluctant to buy a luxury vehicle with a VW badge that didn't look much different from a lowly Passat. Volkswagen pulled the Phaeton from the North American market in 2006 but continued to sell it in Europe.

The sedan will rely on a face lift until the next generation bows in a few years, Jacoby says. The U.S. must wait for the second-gen Phaeton, he confirms. And he hints strongly that under the hood will be a diesel—and perhaps only a diesel—a bold but risky move in this market.

We expect there will be only one Phaeton when the replacement bows—the stretched version. That leaves more room for a vehicle positioned between the Passat and Phaeton.